Politics · India Bureau
RBI soaks up ₹2.4 trillion in surplus liquidity via reverse repo
The Reserve Bank of India has absorbed nearly ₹2.41 lakh crore through variable rate reverse repo auctions as it moves to manage a banking system flush with excess funds. The central bank's liquidity management measures include planned government securities sales worth ₹1 lakh crore.
LSN India ·
The Reserve Bank of India accepted bids worth ₹2,39,959 crore in a variable rate reverse repo (VRRR) auction on Thursday, drawing in funds at a weighted average rate of 5.24 per cent. The operation underscores the RBI's ongoing effort to manage substantial surplus liquidity coursing through the banking system.
Banking sector liquidity stood at approximately ₹7.38 lakh crore in surplus as of mid-September, prompting the central bank to deploy multiple tools to absorb excess funds and align overnight money market rates with the policy repo rate. The VRRR auctions, conducted regularly since August, have become a key instrument in this liquidity management strategy.
Beyond reverse repo operations, the RBI last week announced Open Market Operation (OMO) sales of government securities totalling ₹1 lakh crore. The central bank plans to conduct the auctions in three tranches: ₹50,000 crore on September 17, followed by ₹25,000 crore each on September 21 and September 28. These combined measures reflect the RBI's multi-pronged approach to normalising money market conditions.